Banks are watching closely the situation in Europe and China while exercising caution in terms of lending and pricing. “European banks need to shrink their balance sheets and reduce lending to this part of the world” said CIMB group deputy CEO and head of corporate banking, treasury and markets Datuk Lee Kok Kwan. As a result, the local currency bank loan and bond markets would have to absorb some of the US dollar loans that are not rolled over or renewed as European banks retreat from the funding market. However, that is applicable more in the region than in Malaysia which has almost negligible foreign currency debt or loans. Malaysia’s ringgit bond market and banking system are more than able to meet the funding needs of corporations and the public sector. (StarBiz)